The used car market is an inefficient, fragmented market. The current state of the market presents the consumer with a daunting choice of soliciting the services of a used car dealer or used car broker; placing a for-sale-signed motor vehicle in a public or private locale to draw response from local traffic; employing the utility of conventional classified advertisement through print media; and/or employing the utility of online classified advertisement or auction through a website or website-only method of service.
Used car dealers top a list of 15 professions and industries that consumers believe consistently mislead or try to take advantage of them. Dealers are perceived as swindlers, and the cars as lemons, with no possible way to avoid being ripped off. Such perception is not without good cause. A trade-in may subject the consumer to an even greater loss. Moreover, car buyers who trade in their old vehicles and count on the dealer to retire their outstanding loans occasionally discover later that the dealer has done no such thing. Suddenly, they're stuck with payments, not only on their new cars or trucks but on ones they thought they'd gotten rid of. And woe to those who unwittingly buy a used car with an unpaid loan lurking in its history. They might just lose it to the repo man. People know there are dishonest car dealers out there. Many dealerships prey on the unprepared. It's the consumers who ultimately pay the price for not knowing where to shop for the best car, how to negotiate, and how to protect themselves from predatory practices. At the very least, the car business may appear to be an opportunistic enterprise. But with limited alternatives, consumers have continued to solicit such services.
The used car dealer is considered by some to be quite creative in bringing new versions of the same old scam, the latest one being the so-called Certified Pre-Owned motor vehicle. Technically, certification is the same thing as a warranty. A certified vehicle is one that has passed a series of published tests by the seller who is willing to support the inspection with a warranty. Critics complain that it's a marketing ploy, a sleight-of-hand trick that gets the consumer to pay for a useless piece of paper. On average, luxury buyers paid nearly $3,000 more for their certified used vehicle than did buyers of non-certified luxury brands, while non-luxury buyers paid $1,000 more, for what may amount to nothing more than a piece-of-mind premium. A reasonable conclusion may be that consumers should not be spending billions of dollars a year for a perceived benefit that does not exist. Certified used-car programs are coming under increasing attack from consumer advocates and lawmakers. In this light, the consumer must also be cautious of dealer-offered extended warranty plans. They are often too expensive and offer too little protection.
Another alleged piece-of-mind gimmick incorporated and touted by the used car dealer is a provider of vehicle history information. It genuinely appears that consumer protection is the business of Carfax® as the company demonstrates an ongoing concern to address elements of industry fraud, and promotes consumer awareness. The problem lies not with Carfax and its progeny but with the willful or otherwise failure of insurance companies and the states' Department of Motor Vehicles (DMV) to report and document motor vehicles with a tainted history. Moreover, once vehicle damage is documented on a title, subsequent removal of such disclosure defeats the purpose.
A Consumer Reports® six-month investigation found that there's no way for consumers to know for sure the history of a used vehicle and, overall, 30 percent of vehicles that had been totaled after a fatal accident and then put back on the road with a title that disclosed the damage had that disclosure subsequently removed.
Mercenary auto insurance adjusters and inspectors may stimulate the criminal element of auto salvagers, who actively seek to obtain totaled or major-damaged, high-resale-valued motor vehicles where titles may be washed and placed back into the used car market. Dealers, whether willingly or unknowingly, accept such motor vehicles onto their lots with the Carfax-clean seal of approval, making illegitimate profits at the expense and safety of the consumer. The problem is rampant. To make matters worse, the consumer who has purchased a totaled or major-damaged motor vehicle from a dealer usually has little recourse. The consumer without good vision and legal expertise is subject to have glossed over the fine print in a binding contract and, unknowingly, sign off on a right to sue in a court of law. Thus, the consumer with a legitimate complaint is usually forced into arbitration, which is presumed to have little, if any, effect on an unscrupulous dealer's motis operandi.
Given an informed choice, the smart consumer may more likely be willing to accept the risk of a private transaction with an “as is” motor vehicle (of course, with the option of securing a pre-purchase vehicle inspection by an independent mechanic—a course of action costing roughly $75 to $150 that can save consumers thousands of dollars down the road) than to engage an arms-length deal with a used car dealer for an alleged Carfax-clean, so-called Certified Pre-Owned motor vehicle with a substantially higher price and risk for a comparative motor vehicle. This is not to imply that a vehicle history check should be abandoned in a private transaction—a private transaction simply may reduce the risk that Carfax® or any other competitive vehicle history reporter may be implemented by an unethical dealer for the perpetration of fraud.
It's universal—car shoppers like private deals. Nevertheless, the smart consumer must proceed with caution in a private transaction. The appearance of a private transaction may be nothing more than a curbstoner's deception. Old-economy curbstoners operate on the curb with for-sale-signed motor vehicles, but a growing number favor the Web, where it's easier for sellers to conceal their identity and location from unsuspecting buyers. When buying a used car, it is always advisable to take the car to a trusted, independent mechanic for evaluation. If the seller, since this applies to private sales as well, won't allow your mechanic to inspect the car, walk away quickly.
Notwithstanding dealer profits made in the so-called Certified Pre-Owned program, independent dealers reportedly make an average retail profit at $489 per unit. Although such an amount is not unreasonable, in and of itself, commissions increase considerably when financing is arranged and even bigger when cash back is sold.
A used car broker may be considered as an alias for the used car dealer, as most used car brokers are actually licensed used car dealers. Over the years, used car brokers have morphed into almost every conceivable variation of middleman or woman in the perpetual effort to maximize profit at the consumer's expense. Prior art discloses that the used car broker, also known as the used car dealer, attempts to blur its identity by employing yet additional titles or name changes. The used car broker now claims to be an agent and/or system agent, among others. The used car broker intends to make a substantial profit at the expense of the consumer.
Placement of a for-sale-signed motor vehicle in a public or private locale to draw response from local traffic is a method commonly employed by the consumer in this fragmented market. Several inferior characteristics exist in the utility of this method in common with other methods comprehensively described and fully addressed below. The most apparent drawback to such a method may be the limited amount of exposure the motor vehicle ultimately receives. This may result in a limited and belated response (if any). While a seller may employ this method to avoid associated costs and expenses of placing a motor vehicle on the market by alternative methods, the limited exposure and dilatory response may ultimately have a contrarily profound effect upon the final sale price.
Conventional classified advertisement through print media possesses several inferior characteristics. The used car marketing process can be a long and complicated one when utilizing print media. Advertisement through the classified section of a local or national newspaper is a typical example. Newspaper automotive classifieds are narrowly focused with limited market area. The initial ad placement process is inconvenient, at best, consuming a substantial amount of time. The inconvenience is compounded by the traditional amount of time that must be normally invested by consumers while searching for a motor vehicle of interest, and making initial contact as well as the subsequent making of time-and-location arrangements for inspection, negotiation, and the final exchange. The tangible value is minimal while advertisement space is sold at a premium. Brand name recognition and image is nonexistent as is the case of consumer loyalty.
Over the last few years, there has been a massive audience shift toward the Internet. Online campaigns are stealing ad share from newspapers. Among Internet users, 11 percent said they found the used car they ultimately bought online, while only 9 percent said they found their car in a newspaper classified.
Auto Trader® Magazine and its progeny is an example of as-good-as-it-gets with print media for the consumer rejecting the idea of an arms-length experience with a used car dealer. The only page available for placement of a picture in full color is the front page which holds four listings. It is available on a weekly basis at a premium price. Placement of gray-scale half-tone, single-sized, double-sized, and four-time-sized pictures can be accomplished on a two-week, twelve-week, and unlimited basis. In sales, a great picture can say a thousand words. In the case of Auto Trader® Magazine, although all advertisement space is sold at a premium, the pictures (with the exception of the front cover) are of such poor quality that they serve no legitimate purpose other than to help identify the make and model of motor vehicle advertised for sale.
A consumer wishing to place a motor vehicle for sale with Auto Trader Magazine can choose to schedule an appointment, free of charge, with a photographer to visit one's home or office, or to visit the company's office or a local Photo Express Center and have them take the photo. Regardless of choice, the consumer can expect to experience the inconvenience of awaiting the arrival of a photographer at the consumer's location of choice or loss of time during a, sometime, tumultuous search while driving to an unbranded Photo Express Center (no Auto Trader® signage) sparsely established in local areas, such as oil change/quick lube shops, motor vehicle aftermarket parts stores, car washes, and print shops, to name a few. This inconvenience is relevant to the initial placement of a motor vehicle for sale on Auto Trader® Magazine. The inconvenience is compounded by the traditional amount of time that must be normally invested when utilizing print media, as mentioned in the prior example of placement of an advertisement in a classified section of a newspaper. Moreover, in the event the motor vehicle has been sold, the seller usually becomes the recipient of late inquiries from consumers due to the nature of dated listings inherent in print media. Unlike Auto Trader Magazine, newspapers, and their progeny, the invention strictly provides real-time-inventory. Once sold, the listed motor vehicle shall be removed from the database, forthwith.
Finally, it is clear that Auto Trader® Magazine and its offspring (including the online version) is dealer-driven—40,000 dealers with more than 2.25 million listings versus 250,000 listings by private parties. This may amount to lost time for buyers searching through dealer trappings for the minority listings of privately owned motor vehicles, a substantial number of which may be dated, as addressed above.
Since 1999 the person-to-person auto sales have risen 20% going from 11,448,430 units to over 13,668,383 units in 2003, while used car sales by New Car Dealers have declined. A major concern may exist for the security of consumers who choose to engage a private transaction for the sale or purchase of a motor vehicle. Most consumers may prefer to meet at a location other than their personal residences. In particular, sellers who live alone, or who feel vulnerable in some way, may be unwilling to open up their garages, and perhaps their homes, to strangers shopping for used cars. This may leave the proverbial meeting ground out in the street where bad things can happen. Women may be particularly vulnerable who act alone or have a say in roughly 80 percent of all vehicle purchases. In consideration of consumer safety and crime prevention, consumers may: not invite an unknown buyer to the home; not meet the seller in an unsafe location; choose a safe, neutral meeting ground in a public location; inspect all vehicle numbers for a match—VIN and license plate; be sure that both buyer and seller possess a valid driver license and photo; be sure that both buyer and seller possess a valid insurance card; compare the seller's driver license information to the vehicle registration; not consider a test drive until confidence in the buyer is legitimate; then leave identification information on both with someone who is not going on the test drive—copies if possible.
The evolution of the Internet has made way for a new reality in used-car shopping. First off, know that most of the online sites are a lot alike, so much so that it's sometimes hard to tell them apart, thus, what ultimately separates one site from the next is its network of dealers. Most of these sites are referral services that simply take your name and pass it on to a dealer. Apparently, the Internet has proven to be a good place for dealers to nab customers.
There seem to be an almost endless number of websites that promote various methods in the marketing of motor vehicles. AutoTrader.com is a major player in the marketing of used vehicles although it has become fertile ground for scams. Automart.com claims to be the Internet's largest automotive website featuring used car listings exclusively from dealers. Of course, the consumer can always elect to pursue online car auctions. But in doing so, the consumer must accept a considerable risk in becoming a victim of fraud.
Dennis Berry, former president and CEO of Manheim Auctions, Inc., believes that his company has the best model. Mr. Berry was correct in stating that “physical infrastructure is integral to the process of buying and selling used cars,” thus, “[a] pure dotcom with no physical infrastructure or preexisting relationships—is naïve.” And it appears that the world-wide web does not remove the tedious and tension-filled give and take traditionally demanded to strike a good deal. But the Manheim Auctions, Inc., model may still miss the point. It appears that the model may be flawed by incorporation of the dealer. Mr. Berry stated, “A lot of dotcoms say, ‘We're going to bypass dealers. Consumers don't like doing business with dealers.’ We knew that wouldn't happen— . . . ” The invention herein contradicts Mr. Berry's former prediction.
The Internet, the world-wide web, and electronic commerce appear to have brought regions together to create a national networked economy.
The emergence of online markets and electronic business appear to have an effect on market structures, supply chains and company performance. The fact that the cost of information and communication continues to decline appears to have increased market transparency on some level, and speed of reaction reaches hitherto unknown dimensions. Electronic commerce particularly appears to be having a significant effect on the automobile industry where mergers, acquisitions, and changing-brands are in the news on a global scale. But, while any electronic commerce venture may bring a number of key success factors into play, problems can still arise.
More than half of car buyers use the Internet for research, but most close the deal the way it's always been done: face to face. The direction for the future of car sales lies not in a completely faceless car-buying process, but in service and convenience . . . people have the money to buy cars; they just don't want to be had.
Bricks and clicks is a business strategy or business model in e-commerce by which a company attempts to integrate both online and physical presences. It is also known as click-and-mortar or clicks-and-bricks. Under the right circumstances, vision, and management, the leveraging-advantages of such a model can be quite profound. Such a model can lay the groundwork for the ultimate brand. Strategic branding is the essence of a successful business. A brand is the sum, in the consumer's mind, of the personality, presence, and performance of a given product or service.
A professional car care industry as classified with the United States Department of Commerce, Bureau of Census, Economic Census, North American Product Classification System (NAPCS), Sector 81—Other Services (Industries arranged by NAICS Sectors), specifically NAICS Code 811192 includes: Automotive Detailing Services (i.e., cleaning, polishing); Automotive Washing and Polishing; Car Detailers; Car Washes; Detailing Services (i.e., cleaning, polishing), Automotive; Mobile Car, Truck and Bus Washes; Self-Service Carwash; Truck and Bus Washes, and; Waxing and Polishing of Motor Vehicles.
The professional car care industry offers a variety of services, consisting of: Full-Service; Full-Service Conveyor; Detailing; Full-Service Detailing; Express Detailing; Exterior-Only; Exterior-Only Conveyor; In-Bay Automatic; Self-Service; Convenience Store; Gasoline; Oil Change/Quick Lube; Truck Rental; Oil Company Car Wash; Paintless Dent Repair; Gold Plating; Windshield Repair; Hand Car Wash; Window Tinting, and; Vinyl/Leather Repair, according to the professional car care industry.
It is estimated that there are 75,000 car washes in North America where consumers spend more than $22.2 billion annually to have their vehicles professionally cleaned.
A professional car care enterprise has a division strictly dedicated to servicing dealerships in the automotive industry—new and used car dealerships, Internet auto sales companies, auto auctions, manufacturers, and on-site auto shows, as well as dealerships for RVs, boats, trucks, motorcycles and new farm equipment.
The professional car care industry idealizes itself as the better solution in consistency with ecological and environmental concerns, that is to say, the industry green-markets the benefits of pollution control and water conservation through its use versus individual car care alternatives. The Environmental Protection Agency (EPA) also recognizes the environmental benefits of professional car care. But many consumers are still price conscious and driveway washing regularly.
Thus far, the professional car care industry has been unable to develop a meaningful, far-reaching method to promote its ecological and environmental benefits to the public, at large, even though concern about the environment encourages buying products and services that are ecologically friendly and reduce pollution. Providing such information and education still represents the biggest opportunity to expand the market to mainstream consumers.